DEXO announces earnings tomorrow. Recently they used $98M to close out of $311M of debt. That is to say if you owed $311M and you could pay it off with $98M in cash, is that something that you would want to do?

YLO has their annual meeting May 8th (13 days). This is the largest position. I think that they could announce their plan from May 1-May 8th. I’m expecting some very interesting remarks during this time frame… at which point I might look to go all-in.

I was recently quoted in The Globe and Mail, which is Canada’s New York Times:

http://www.theglobeandmail.com/globe-investor/yellow-medias-debt-woes-pit-creditors-against-shareholders/article2391727/

 

“As an equity holder, I am still failing to see how the creditors have any say in the matter as long as the company continues to meet its debt obligations as they come due,” Mr. Bradford said.

I will say that for the last 4 months I have been adding YLO on a daily basis as the price has continued to fall. I think that everyone hates phone book companies and thinks that they are going out of business, but YLO makes $600M a year before interest and taxes and has $250M of positive free cash flow a year and is the largest digital advertising company in Canada.

I think that the preferred D shares that are trading at $0.70 are worth $25 given my assumptions which are pretty basic:

  1. I analyzed the future cash flow and found out that it meets debt obligations as they come due.
  2. The preferred D shares are obligated to pay out $25 in 2015.

Also, YLO’s debt is trading at around 50 cents on the dollar and the market value of their debt is around $900M, and the company has $350M in cash. So in theory, they could close out on $700M of debt for the price of $350M.

By admin